Raakesh B Kulwal Vs Param Dairy Limited (NCLAT Delhi)
The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) challenged the order dated 4 July 2025 of the National Company Law Tribunal, Jaipur Bench, admitting an application under Section 9 filed by the Operational Creditor and initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
The Corporate Debtor, engaged in the manufacture and trading of butter and ghee, had business dealings with the Operational Creditor, which supplied butter and ghee under confirmed orders. The Operational Creditor alleged that only part payments had been made and, after repeated requests for payment, issued a demand notice dated 2 November 2022 under Section 8 of the IBC claiming an operational debt of Rs. 3.83 crore, comprising a principal amount of Rs. 3.08 crore and compounded interest of Rs. 75.33 lakh. The Corporate Debtor replied on 14 December 2022 disputing the claim and alleging pre-existing disputes relating to four invoices involving defective consignments, non-accounting of returned stock and non-adjustment of accounts. The Operational Creditor thereafter filed the Section 9 application, which was admitted by the Adjudicating Authority.
The appellant contended that the Adjudicating Authority ignored substantial pre-existing disputes arising from the supply of inferior and substandard quality butter and ghee, allegedly confirmed by laboratory test reports. It was also submitted that approximately 67,310 kilograms of defective ghee had been returned, but the Operational Creditor failed to adjust the returned stock or reconcile the accounts, resulting in incorrect ledger entries. The appellant argued that proper adjustments would have shown amounts recoverable from the Operational Creditor rather than payable to it. It was further contended that there was no agreement for payment of interest, that the operational debt had not crystallised, and that the Section 9 proceedings amounted to debt recovery. The appellant also relied on its reply to the Section 8 demand notice, pre-institution mediation proceedings under Section 12A of the Commercial Courts Act, and the judgment in Innoventive Industries Limited versus ICICI Bank to submit that genuine pre-existing disputes existed before filing of the Section 9 application.
